HSBCL-SRP vs SPOUSES BIENVENIDO AND EDITHA BROQUEZA G.R. NO. 178610 NOV.

17, 2010

FACTS:

 Petitioners Gerong and Editha Broqueza are employees of Hongkong and Shanghai Banking Corporation (HSBC). They are also members
of HSBC, Ltd. Staff Retirement Plan.
 The Plan is a retirement plan established by HSBC through its BOT for the benefit of the employees.
 On Oct. 1, 1990, petitioner Broqueza obtained a car loan in the amount of P175,000.00.
 On Dec. 12, 1991, she again applied and was granted an appliance loan in the amount of P24,000.00.
 Petitioner Gerong, on the other hand applied and was granted an emergency loan in the amount of P35,780.00 on June 2, 1993.
 The loans were paid through automatic salary deductions.
 A labor dispute arose between HSBC and its employees.
 Majority of HSBCs employees were terminated among them the petitioners.
 The employees filed an illegal dismissal case before the NLRC against HSBC, which is now pending before the CA.
 Because of the dismissal, petitioners were not able to pay the monthly amortizations of their respective loans. They were considered
delinquent. Demands to pay were made.
 On July 31, 1996, HSBCL-SRP filed a civil case against the spouses.
 On Sept. 19, 1996, HSBCL-SRP filed another civil case. Both suits were civil actions for recovery and collection of sums of money.
 The MeTC ruled that the nature of HSBCs demands for payment is civil and has no connection to the ongoing labor dispute.
 The loans secured by their future retirement benefits to which they are no longer entitled are reduced to unsecured and pure civil
obligations. They are immediately demandable.
 The RTC reaffirmed the decision but the CA reversed it.
 On Aug. 6, 2007, HSBCL-SRP filed a manifestation withdrawing the petition against Gerong because she already settled her
obligations.

ISSUE: W.O.N. the loans of the Sps. Broqueza is a pure obligation and demandable at once even if they were dismissed by HSBC.

HELD: The RTC is correct in ruling that since the Promissory Notes do not contain a period, HSBCL-SRP has the right to demand immediate
payment. Art. 1179 of the NCC applies. The spouses obligation to pay HSBCL-SRP is a pure obligation because they do not contain a period. Once
Editha Broqueza defaulted in her monthly payment, HSBCL-SRP made a demand to enforce a pure obligation.

 Despite the spouses Broquezas protestations, the payroll deduction is merely a convenient mode of payment and not the sole source of
payment for the loans.
 HSBCL-SRP never agreed that the loans will be paid only though salary deductions.
 The same never agreed that if Editha Broqueza ceases to be an employee of HSBC, her obligation to pay the loans will be suspended.
 HSBCL-SRP can immediately demand payment of the loans anytime because the obligation to pay has no period.
 Moreover, the spouses Broqueza have already incurred in default in paying the monthly instalments.
 Finally, the enforcement of a loan agreement involves debtor-creditor relation founded on contract and does not in any way concern the
employee relations. As such it should be enforced through a separate civil action in the regular courts and not before the Labor Arbiter.

Pay vs. Vda. de Palanca - No. L-29900 June 28, 1974

When Payable on Demand

FACTS: Petitioner George Pay is a creditor of the Late Justo Palanca. Petitioner’s claim is based on a promissory note dated January 30, 1952—
where Justo Palanca and Rosa Gonzales Vda. de Carlos Palanca promised to pay petitioner the amount of 26,900 PHP with interest at the rate of 12%
per annum upon receipt by either of the undersigned of cash payment from the Estate of the late Don Carlos Palanca or upon demand. Petitioner is
now seeking his claim to Segundina Chua de Palanca—the surviving spouse of the late Justo Palanca who he appointed as administratrix of a certain
piece of property. The surviving spouse refused to be appointed as the administratrix; that the property sought to be administered no longer belonged
to the debtor and that the right of petitioner has already prescribed.

ISSUE: Whether a creditor is barred by prescription to collect on a promissory note executed more than fifteen (15) years earlier this petition.

HELD: No, he is barred by prescription. Since the note was dated on January 30, 1952 it is clear that more than ten (10) years has already transpired
from that time until this date. Thus, the action of creditor has definitely prescribed. Even if the petitioner is assailing the validity of the refusal of the
surviving spouse, the question of prescription need only to be answered. The obligation being due and demandable, it would appear that the filing of
the suit after fifteen (15) years was much too late considering that under the Civil Code the prescriptive period for a written contract is that of ten (10)
years.

KEY TAKE-AWAY OR DOCTRINE TO REMEMBER

Mixed - when the fulfillment of the condition depends partly upon the will of a party to the obligation and partly upon chance and/or will of a third person. (Th

FACTS

• [August 1918] Smith Bell and Mr. Vicente Sotelo Matti entered into contracts whereby the former obligated itself to sell, and the latter to purchase f

York and delivered within 3 months; two expellers for P25,000 coming from San Francisco to be delivered on September 1918 or as soon as possibl

• The delivery of the stipulation was worded as: “Approximate delivery within ninety days. – This is not guaranteed.” 


• The tanks arrived at Manila on the 27th of April, 1919; the expellers on the 26th of October, 1918; and the motors on 
 the 27th of February, 1919. 


• Smith Bell notified Matti of the arrival of the goods, but Mr. Matti refused to receive them and pay the price. 


• Smith Bell filed a suit against Matti based on four separate causes of action. 


• In his answer, Matti and the intervenor, Manila Oil Refining, denied the allegations and claimed that the goods never 
 arrived at Manila. Likewise,

manufacturing coconut oil, the intervenor 
 suffered damages for the non-delivery of tanks and the expellers. 


• The lower court absolved defendants as to the complaint of tanks and electric motors, but not for the expellers. 


• Both parties appealed to the SC. 


ARTICLES/LAWS INVOLVED

Art. 1193. Obligations for whose fulfillment a day

that day comes. Obligations with a resolutory perio
1. WON Smith Bell fulfilled its obligation of delivering the goods in due time – YES. day certain.

A day certain is understood to be that which must n

 If the uncertainty consists in whether the day will c
be regulated by the rules of the preceding Section.

HELD

1. The SC held that to solve the question, it is necessary to determine the period fixed for the delivery of the goods.

As regards the tanks, the contracts A and B (pages 61 and 62 of the record) are similar, and in both of them we find this clause:
 "To be delivered within 3 or

carries with it absolutely no obligation on our part — Government regulations, railroad embargoes, lack of vessel space, the exigencies of the requirements of
may act to entirely vitiate the indication of shipment as stated. In other words, the order is accepted on the basis of shipment at Mill's convenience, time of ship
accomplish."

"The following articles, herein below more particularly described, to be shipped at San Francisco within the month of September /18, or as soon as possible. —

And in the contract relative to the motors (Exhibit D, page 64, rec.) the following appears:
 "Approximate delivery within ninety days. — This is not guarante

Priority Certificate, subject to the United States Government requirements and also subject to confirmation of manufactures."

In all these contracts, there is a final clause as follows:
 "The sellers are not responsible for delays caused by fires, riots on land or on the sea, strikes or other c

control of the sellers or their representatives."

Under the said stipulations, it cannot be said that there was a definite date fixed for the delivery of the goods. As to the tanks, the agreement was that the delive
period was subject to the contingencies referred to in a subsequent clause. With regard to the expellers, the contract says "within the month of September, 1918
with reference to the motors, the contract contains this expression, "Approximate delivery within ninety days," but right after this, it is noted that "this is not gu

And from the records, the contract was entered during the time of World War II when there existed rigid restrictions on the export from the United
States of articles like the machinery in question, and maritime, as well as railroad, transportation was difficult, which fact was known to the parties.
Considering these contracts in the light of the civil law, we cannot but conclude that the term which the parties attempted to fix is so uncertain that
one cannot tell just whether, as a matter of fact, those articles could be brought to Manila or not. If that is the case, as we think it is, the obligation
must be regarded as conditional. It is sufficiently proven in the record that the plaintiff has made all the efforts it could possibly by expected to make
under the circumstances, to bring the goods in question to Manila, as soon as possible. And, as a matter of fact, through such efforts, it succeeded in
importing them and placing them at the disposal of the defendant, Mr. Sotelo, in April, 1919. Therefore, the plaintiff has not been guilty of any delay
in the fulfillment of its obligation, and, consequently, it could not have incurred any of the liabilities mentioned by the intervenor in its counterclaim
or set-off.

CHAVEZ vs GONZALES

NATURE: direct appeal by prevailing party in a suit for breach of oral contract and recovery of damages but was
unsatisfied with the rendered decision of the CFI

Facts: July 1963- plaintiff Chavez asked defendant Gonzales to fix his typewriter. Gonzales was unable to finish the job so
Chavez asked for it repeatedly but Gonzales did not comply. Oct 1963- Gonzales asked Chavez for Php6 for materials to
be used in fixing the typewriter. A few days later, Chavez went to Gonzales’ house to claim the typewriter because he
was tired of waiting. After claiming it and returning home, he found out that his typewriter was missing some internal
parts, the interior cover and some screws. So, he wrote a letter demanding for the return of the Php6 and the missing
parts, which the defendant did so willingly. Aug 1964- Chavez had Freixas Business fix his typewriter costing him
Php89.85. Aug 1965- Chavez sued Gonzales for the costs he incurred in having his typewriter fixed and demanded
compensation.

- The CFI ruled Gonzales should not be held chargeable for the full amount because the invoice return shows that
the missing parts only cost Php31.10. so he should only pay the Php31.10
- Chavez states Gonzales should be liable not only for the thirty-one pesos but for the full costs he incurred
including the labor and the materials in fixing it. He invokes it under ART 1167 “if a person obliged to do
something fails to do it, the same shall be executed at his cost”
- Gonzales says he is not liable at all because in their contract, there was no fixed period. So, he says that under
Art 1197, Chavez should have first filed for the court to fix the period.

Issue

Can Gonzales be held chargeable for the full costs Chavez incurred in having his typewriter fixed?

Held

YES. Though Gonzales returned the typewriter to Chavez, he did so without compliance to their contract to fix it. this in
itself is considered a breach of contract on his obligation to fix it.

As to Gonzales’ contention that Chavez should have filed for a fixed period first because there was no period mentioned
in their contract, it is untenable. This is because he already practically admitted non-performance on his part of the
contract when he returned the typewriter, which was even in a worse state when he did. The fixing of period here as to
the contract would become a mere formality and would have no more purpose than to delay the case proceedings.

The court thus holds him liable under 1167 for failing to perform his obligation on their contract and as well as under
1170 for failing to return the typewriter in the same condition as it was when brought to him.

SINGSON ENCARNACION VS. BALDOMAR

77 PHIL 470

FACTS:
Vicente Singson Encarnacion leased his house to
Jacinta Baldomar and her son, Lefrando Fernando upon a
month-to-month basis. After Manila was liberated in the
last war, Singson Encarnacio notified Baldomar and her
son Fernando to vacate the house because he needed it for
his office as a result of the destruction of the building
where he had his office before. Despite the demand, the
Baldomar and Fernando continued their occupancy.

The defense of Baldomar and Fernando was that the

contract with Singson Encarnacion authorized them to
continue occupancy indefinitely while they should
faithfully fulfill their obligation with respect to payment of
rentals. Singson Encarnacion contended that the lease had
always and since the beginning been upon a month-tomonth
basis.

ISSUE:
Was it tenable for Singson Encarnacion to discontinue
the lease of Baldomar and her son?

RULING:
The continuance and fulfillment of the contract of lease
cannot be made to depend solely and exclusively upon the
free and uncontrolled choice of the lessees between
continuing paying the rentals or not, completely depriving
the owner of all say in the matter. The defense of Baldomar
and Fernando would leave to the sole and exclusive will of
one of the contracting parties the validity and fulfillment of
the contract of lease, within the meaning of Article 1256 of
the Civil Code. For if this were allowed, so long as the
lessee elected to continue the lease by continuing the
payment of the rentals the owner would never be able to
discontinue the lease; conversely, although the owner
should desire the lease to continue, the lessee could
effectively thwart his purpose if he should prefer to
terminate the contract by the simple expedient of stopping
payment of the rentals.

ELEIZEGUI VS MANILA LAWN TENNIS CLUB

G.R. 967

FACTS: This suit concerns the lease of a piece of land for a fixed consideration and to endure at the will of the
lessee. By the contract of lease the lessee is expressly authorized to make improvements upon the land, by
erecting buildings of both permanent and temporary character, by making fills, laying pipes, and making such
other improvements as might be considered desirable for the comfort and amusement of the members.

With respect to the term of the lease the present question has arisen. In its decision three theories have been
presented: One which makes the duration depend upon the will of the lessor, who, upon one month's notice
given to the lessee, may terminate the lease so stipulated; another which, on the contrary, makes it dependent
upon the will of the lessee, as stipulated; and the third, in accordance with which the right is reversed to the
courts to fix the duration of the term.

The first theory is that which has prevailed in the judgment below, as appears from the language in which the
basis of the decision is expressed: "The court is of the opinion that the contract of lease was terminated by the
notice given by the plaintiff on August 28 of last year . . . ." And such is the theory maintained by the plaintiffs,
which expressly rests upon article 1581 of the Civil Code, the law which was in force at the time the contract
was entered into (January 25, 1890). The judge, in giving to this notice the effect of terminating the lease,
undoubtedly considers that it is governed by the article relied upon by the plaintiffs, which is of the following
tenor: "When the term has not been fixed for the lease, it is understood to be for years when an annual rental
has been fixed, for months when the rent is monthly. . . ." The second clause of the contract provides as
follows: "The rent of the said land is fixed at 25 pesos per month."

ISSUE: Was there a conventional term, a duration, agreed upon in the contract in question?
RULING: Yes. The obligations which, with the force of law, the lessors assumed by the contract entered into,
so far as pertaining to the issues, are the following: "First. . . . They lease the above-described land to Mr.
Williamson, who takes it on lease . . . for all the time the members of the said club may desire to use it . . .
Third. . . . the owners of the land undertake to maintain the club as tenant as long as the latter shall see fit,
without altering in the slightest degree the conditions of this contract, even though the estate be sold."

In view of these clauses, it can not be said that there is no stipulation with respect to the duration of the
lease, or that, notwithstanding these clauses, article 1581, in connection with article 1569, can be applied. If
this were so, it would be necessary to hold that the lessors spoke in vain that their words are to be disregarded
a claim which can not be advanced by the plaintiffs nor upheld by any court without citing the law which
detracts all legal force from such words or despoils them of their literal sense.

PHILIPPINE BANKING CORPORATION, representing the estate of JUSTINA SANTOS Y CANON FAUSTINO, deceased, plaintiff-
appellant, vs.LUI SHE in her own behalf and as administratrix of the intestate estate of Wong Heng, deceased, defendant-
appellant.
CASTRO, J.; September 12, 1967

FACTS:

1. Justina Santos y Canon Faustino (aka Lola J—my nickname not the case’s :P) and her sister Lorenza were the owners in
common of a piece of land in Manila. (They are 2 very rich old maid doñas.) In it are 2 residential houses with entrance on
Florentino Torres street and the Hen Wah Restaurant with entrance on Rizal Avenue.

2. The sisters lived in one of the houses, while Wong Heng, a Chinese, lived with his family in the restaurant. Wong had been a
long-time lessee of a portion of the property, having a monthly rental of P2, 620.

3. September 22, 1957: Lola J became the owner of the entire property as Lorenza died with no other heir. At that tim, she
was already 90 years old, blind, crippled and an invalid, she was left with no other relative to live with, but she was taken
cared of by Wong. (BONUS INFO: Lola had 17 dogs and 8 maids naman with her. :P)

4. November 15, 1957: Lola J executed a contract of lease in favour of Wong for the "grateful acknowledgment of the
personal services of the Lessee to her," (Note: Wong was the one who managed her affairs like checking Lola J’S account to
pay for the maids and pay for dog food. His 4 kids also frequently visited her. She also believed that Wong saved her and
Lorenza from the fire after the liberation of Manila but a witness said they were actually saved by 2 other guys.)

5. This contract covering the portion was then already leased to him and another portion fronting Florentino Torres street.
The lease was for 50 years, although the lessee was given the right to withdraw at any time from the agreement; the
monthly rental was P3, 120. 10 days later (November 25), the contract was amended so as to make it cover the entire
property, including the portion on which the house of Justina Santos stood, at an additional monthly rental of P360.

6. December 21: she executed contract giving Wong the option to buy the leased premises for P120 K payable within 10 years
at a monthly instalment of P1K. The option was conditioned on his obtaining Philippine citizenship, a petition for which was
then pending in the CFI Rizal.

7. November 18, 1958: she executed 2 other contracts, one extending the term of the lease to 99 years, and another fixing the
term of the option at 50 years. Both contracts are written in Tagalog. In 2 wills executed on August 24 and 29, 1959, she
bade her legatees to respect the contracts she had entered into with Wong, but in a codicil of a later date (November 4,
1959) she appears to have a change of heart. Claiming that the various contracts were made by her because of
 machinations and inducements practised by him, she now directed her executor to secure the annulment of the
contracts.

8. Both parties however died, Wong Heng on October 21, 1962 and Lola J on December 28, 1964. Wong was substituted by his
wife, Lui She, the other defendant in this case, While Lola J was substituted by the Philippine Banking Corporation (PBC).
Lola J maintained — now reiterated by the PBC — that the lease contract should have been annulled along with the four
other contracts because it lacks mutuality, among others

9. Paragraph 5 of the lease contract states that "The lessee may at any time withdraw from this agreement." It is claimed that
this stipulation offends article 1308 of the Civil Code which provides that "the contract must bind both contracting parties;
its validity or compliance cannot be left to the will of one of them."

10. RTC: Contracts are null and void except for the Nov. 15, 1957 lease contract.

11. Pet’s arguments: 1) The contracts were obtained by Wong “through fraud, misrepresentation, inequitable conduct, undue
influence and abuse of confidence and trust and by taking advantage of the helplessness of the plaintiff were made to
circumvent the consti. Prohibition re: aliens acquiring lands in the Phil and also of the Phil. Naturalization laws” (Note: there
was a time Lola J wanted to adopt Wong to speed up the process.) 2) lease contract should also be annulled because it lacks
mutuality; because it included a portion which, at the times, was in custodial legis because the contract was obtained in
violation of the fiduciary relations of the parties, and that the contract was absolutely simulated (undue influence, etc.)

12. Respondent’s arguments: Lola J’s trust wasn’t taken advantage of in order to secure the execution of the contracts. Still, he
admitted that he did enjoy her trust and confidence proof of which are the sums of P3K that she entrusted to him for
safekeeping and P22K that was deposited in their joint account that she head with one of her maids.

ISSUES/ HELD:
(Note: all of these refer to void contracts but the commentary expounds on the alien issue since it was this that made the contract truly VOID.)

1. WON the contracts are void for trying to circumvent Philippine Constitution against alienation of property to foreigners?

YES. The contract of lease cannot be sustained. Yes, a lease to an alien for a reasonable period is valid, so was an option giving an
alien the right to buy real property on condition that he is granted Philippine citizenship.

But if an alien was given not only a lease of, but also an option to buy, a piece of land, by virtue of which the Filipino owner cannot
sell or otherwise dispose of his property, this to last for 50 years, then it became clear that the arrangement was a virtual transfer
of ownership whereby the owner divested himself in stages not only of the right to enjoy the land (jus possidendi, jus utendi, jus
fruendi and jus abutendi) but also of the right to dispose of it (jus disponendi) — rights the sum total of which make up ownership.
It was just as if today the possession is transferred, tomorrow, the use, the next day, the disposition, and so on, until ultimately all
the rights of which ownership is made up are consolidated in an alien. And yet this was just exactly what the parties in this case did
within this pace of one year, with the result that Lola J's ownership of her property was reduced to a hollow concept.

2. WON the insertion in the contract of a resolutory condition (“lessee may at any time withdraw from the agreement), valid?

YES. In the early case of Taylor vs. Uy Tiong Piao, the SC said:

Art.1256 [now art. 1308] of the Civil Code in our opinion creates no impediment to the insertion in a contract for personal service of
a resolutory condition permitting the cancellation of the contract by one of the parties. Such a stipulation, as can be readily seen,
does not make either the validity or the fulfillment of the contract dependent upon the will of the party to whom is conceded the
privilege of cancellation; for where the contracting parties have agreed that such option shall exist, the exercise of the option is as
much in the fulfillment of the contract as any other act which may have been the subject of agreement. Indeed, the cancellation
of a contract in accordance with conditions agreed upon beforehand is fulfillment
Also, here, the right of Wong to terminate the contract depends on the terms stipulated so it’s not really based on his sole will. At
any rate, even if no term had been fixed in the agreement, this case would at most justify the fixing of a period but not the
annulment of the contract.

3. WON the contract is void because the property cannot be leased for being in custodio legis?
NO. Lola J was already the owner of the property and not Lorenza so she can lease the property to whoever she wants.

4. WON the contracts are void for violating the fiduciary relationship?
NO. Wong was never an agent of Lola J even if they were super close. Atty. Yumol, (counsel for Lola J), admitted that Lola J’s close
fellow Lola friend and maid were always by her side and they could have testified to whatever undue influence but they were not
presented as witnesses. And besides, Lola J was firm in her decision in signing the contract because she believes Wong saved her life.

5. WON Lola J’s consent was valid?

YES. She was well-informed by her lawyer about the possible dangers of the contract and she still gave her consent voluntarily.

DISPOSITION: The contracts in question are annulled and set aside; the land subject-matter of the contracts was ordered returned to the estate of Justina Santos as
represented by the Philippine Banking Corporation.

LIM VS. PEOPLE

133 SCRA 333

FACTS:

On January 10, 1966, appellant Lourdes Valerion Lim who is a businesswoman went to the house of
Maria Ayroso and proposed to sell Ayroso’s tobacco consisting of 615 kilos at P1.30 a kilo. The appellant was
to receive the overprice for which she could sell the tobacco. This agreement was made in the presence of the
plaintiff’s sister, Salud Bantug. Salvador Bantug drew the document which apprised of a certification that
appellant had received from Ayroso the amount of 615 kilos of leaf tobacco to be sold at P1.30 per kilo. It is
also stated there that the proceeds in the amount of P799.50 will be given to Ayroso as soon as it was sold. It
was signed by the appellant and witnessed by the complainant’s sister Salud Bantug and the latter’s maid
Genoveva Ruiz. The appellant that time was bringing jeep, and the tobacco was simply loaded in the jeep.
However, of the total value of P799.50, the appellant had paid to Ayroso only P240.00 and this was paid on
three different times. As no further amount was paid, complainant Ayroso filed a complaint against appellant
Lim for estafa. Judgment was rendered against appellant. In this petition for review on certiorari, appellant
claimed that the obligation does not fix a period and that the court should fix the duration thereof pursuant to
Article 1197 of the Civil Code.

ISSUE: Is appellant’s contention, saying that Article 1197 applies, correct?

RULING: No. It is clear in the agreement that the proceeds of the sale of the tobacco should be turned over to
the complainant as soon as the same was sold, or, that the obligation was immediately demandable as soon
as the tobacco was disposed of. The agreement constituted her as an agent with the obligation to return the
tobacco if the same was not sold. The fact that appellant received the tobacco and the proceeds to be given to
complainant as soon as it was sold, strongly negates transfer of ownership of the goods to the appellant.
Furthermore, where a person obliged himself to pay to another the proceeds of the latter’s tobacco as soon as
they are disposed of, a period exists for payment of the obligation and, therefore, Article 1197 does not apply.
The receipt, therefore, should be considered as a contract of agency to sell the subject tobacco between the
appellant and complainant.

ARANETA VS PHIL. SUGAR ESTATES

DEVELOPMENT CO.
20 SCRA 330

FACTS: J. M. Tuason & Co., Inc. is the owner of a big tract land situated in Quezon City, and on July 28, 1950, [through Gregorio Araneta, Inc.] sold a portion thereof to
Philippine Sugar Estates Development Co., Ltd. The parties stipulated, among in the contract of purchase and sale with mortgage, that the buyer will build
 on the said parcel land the Sto. Domingo Church and Convent while the seller for its part will construct streets. But the seller, Gregorio Araneta, Inc., which began
constructing the streets, is unable to finish the construction of the street in the Northeast side because a certain third-party, by the name of Manuel Abundo, who has
been physically occupying a middle part thereof, refused to vacate the same; Both buyer and seller know of the presence of squatters that may hamper the
construction of the streets by the seller. On May 7, 1958, Philippine Sugar Estates Development Co., Lt. filed its complaint against J. M. Tuason & Co., Inc., and
instance, seeking to compel the latter to comply with their obligation, as stipulated in the above-mentioned deed of sale, and/or to pay damages in the event they
failed or refused to perform said obligation. The lower court and the appellate court ruled in favor of Phil. Sugar estates, and gave defendant Gregorio Araneta, Inc., a
period of two (2) years from notice hereof, within which to comply with its obligation under the contract, Annex "A". Gregorio Araneta, Inc. resorted to a petition for
review by certiorari to this Court.

ISSUES: Was there a period fixed?

RULING: Yes. The fixing of a period by the courts under Article 1197 of the Civil Code of the Philippines is sought to be justified on the basis that petitioner (defendant
below) placed the absence of a period in issue by pleading in its answer that the contract with respondent Philippine Sugar Estates Development Co., Ltd. gave
petitioner Gregorio Araneta, Inc. "reasonable time within which to comply with its obligation to construct and complete the streets." If the contract so provided, then
there was a period fixed, a "reasonable time;" and all that the court should have done was to determine if that reasonable time had already elapsed when suit was
filed if it had passed, then the court should declare that petitioner had breached the contract, Was it within the powers of the lower court to set the performance of
the obligation in two years time? NO. Even on the assumption that the court should have found that no reasonable time or no period at all had been
fixed (and the trial court's amended decision nowhere declared any such fact) still, the complaint not having sought that the Court should set a period, the court
could not proceed to do so unless the complaint included it as first amended; Granting, however, that it lay within the Court's power to fix the period of performance,
still the amended decision is defective in that no basis is stated to support the conclusion that the period should be set at two years after finality of the judgment. The
list paragraph of Article 1197 is clear that the period can not be set arbitrarily. The law expressly prescribes that “the Court shall determine such period as may under
the circumstances been probably contemplated by the parties.”

It must be recalled that Article 1197 of the Civil Code involves a two-step process. The Court must first determine that "the obligation does not fix a period" (or
that the period is made to depend upon the will of the debtor)," but from the nature and the circumstances it can be inferred that a period was intended" (Art. 1197,
pars. 1 and 2). This preliminary point settled, the Court must then proceed to the second step, and decide what period was "probably contemplated by the parties"
(Do., par. 3). So that, ultimately, the Court can not fix a period merely because in its opinion it is or should be reasonable, but must set the time that the parties are
shown to have intended. As the record stands, the trial Court appears to have pulled the two-year period set in its decision out of thin air, since no circumstances are
mentioned to support it. Plainly, this is not warranted by the Civil Code. Does “reasonable time” mean that the date of performance would be indefinite? The Court of
Appeals objected to this conclusion that it would render the date of performance indefinite. Yet, the circumstances admit no other reasonable view; and this
very indefiniteness is what explains why the agreement did not specify any exact periods or dates of performance.

Araneta vs. Phil. Sugar Estate Devt., Inc

20 SCRA 330/GR L-22558
Art. 1197

Facts
 Petitioner and Respondent entered into a contract of purchase and sale with mortgage whereas P sold a big tract of
land to R subject to following conditions: 1) that buyer will build on said land the Sto. Domingo Church and Convent
and 2) that seller will construct streets surrounding the land which shall be named “Sto. Domingo Avenue”
 R finished the construction of the church will P was unable to finish the construction of the streets because a third
party, occupying the middle part thereof, refuse to vacate the same
 R filed a complaint seeking P to comply with the obligation and/or pay damages in case of failure/refusal
 RTC and CA decided in favor of R and gave P 2 years to comply with its obligation

Held
1. Art. 1197 involves two step processes: 1) the Court must first determine that the obligation does not fix period
(or that the period is made to depend upon the will of the debtor), but from the nature and the
circumstances it can be inferred that a period was intended (Art 1197 1&2) and 2) the Court must proceed
to second step and decide what period was probably contemplated by parties.
 Even on the assumption that the court should have found out that no reasonable time or period at all had been fixed,
the COMPLAINT NOT HAVING SOUGHT THE COURT SHOULD SET A PERIOD, the court could not
proceed to do so unless the complaint is amended
 No basis to support the conclusion that period should be set at two years after finality of judgment, considering that
the land was occupied by squatters. Parties must comply with legal processes in evicting the squatters. Reasonable
time: at the date all the squatters on affected areas are finally evicted
Millare v. Hon. Hernando

151 SCRA 484, June 30, 1987

Feliciano, J.:

Facts: Pacifica Millare and spouses Co entered into a five-year Contarct of Lease, where Pacifica agreed to rent out
“People’s Restaurant” with a monthly rate of P 350.00. In 1980, Pacifica informed spouses that the lease will continue if
they will pay P 1,200.00 a month. Spouses opposed, bargaining that P 700.00 a month will be paid. Spouses thought that
the Contract of Lease was renewed that they continued to occupy the said property. On July 1980, Pacifica wrote
Spouses Co to vacate the premises because the Lease Contract will not be renewed. Another letter of demand was given
by Pacifica. The spouses now filed a complaint seeking the renewal of the Lease Contract. On the other hand, Pacifica
filed an ejectment case against the spouses. The judge dismissed the case and ordered the renewal of the Contract.

Issue: Whether or not Article 1197 of the Civil Code is applicable.

Held: No. The first paragraph of the said provision is inapplicable because the contract fixed a period. The second
paragraph will also not apply because the duration of renewal of the contract lies to the will of both parties. Lastly, the
provision will not apply since the contract was not renewed. Hence, Article 1197 is not applicable to the case at bar.

ARCO PULP AND PAPER CO., INC. and CANDIDA A. SANTOS, petitioners, vs. DAN T. LIM, doing
business under the name and style of QUALITY PAPERS & PLASTIC PRODUCTS ENTERPRISES,
respondent.

FACTS:
1. Dan T. Lim (Lim) works in the business of supplying scrap papers, cartons, and other raw materials, under
the name and Quality Paper and Plastic Products, Enterprises, to factories engaged in the paper mill
business. He delivered scrap papers to Arco Pulp and Paper Company, Inc. (Arco Pulp and Paper) through
its CEO and President, Candida A. Santos. The parties allegedly agreed that Arco Pulp and Paper would
either pay Lim the value of the raw materials or deliver to him their finish products of equivalent value.
2. Lim alleged that when he delivered the raw materials, Arco Pulp and Paper issued a post-dated check,
with the assurance that the check would not bounce. When he deposited the check, it was dishonored for
being drawn against a closed account.
3. On the same day, Arco Pulp and Paper, and a certain Eric Sy executed a memorandum of agreement where
Arco Pulp and Paper bound themselves to deliver their finished products to Megapack Container Corp.,
owned by Eric Sy. According to the memorandum, the raw materials would be supplied by Lim, through
his company, Quality Paper and Plastic Products.
4. Lim sent a demand letter to Arco Pulp and Paper but no payment was made to him. Hence, he filed a
complaint for collection of sum of money.
5. The RTC rendered a judgment in favor of Arco Pulp and Paper and dismissed the complained, holding
that when Arco Pulp and Paper and Eric Sy and entered into the memorandum of agreement, novation
took place, which extinguished Arco Pulp and Paper;s obligation to Lim.
6. On appeal, Lim argued that novation did not take place since the memorandum of agreement between
Arco Pulp and Paper and Eric Sy was an exclusive and private agreement between them.
7. The CA reversed the RTC decision and ruled that the facts and circumstances in this case clearly showed
the existence of an alternative obligation.
ISSUE: Whether the obligation between the parties was an alternative obligation.

HELD: Yes. The obligation between the parties was an alternative obligation. The rule on alternative obligation
is governed by Article 1199 of the Civil Code.

In an alternative obligation, there is more than one object, and the fulfillment of one is sufficient, determined by
the choice of debtor who generally has the right of election. The right of election is extinguished when the party
who may exercise that option categorically and unequivocally makes his or her choice known. The choice of the
debtor must also be communicated to the creditor who must receive notice of it since the object of this notice is
to give the creditor… opportunity to express his consent, or to impugn the election made by the debtor, and only
after said notice shall the election take legal effect when consented by the creditor, or if impugned by the latter,
when declared proper by a competent court.

According to the factual findings of the trial court and appellate court, the original contract between the parties
was for respondent to deliver scrap papers worth Php7,220,968.31 to petitioner Arco Pulp and Paper. The payment
for this delivery became petitioner Arco Pulp and Paper’s obligation. By agreement, petitioner Arco Pulp and
Paper, as the debtor, had the option to either (1) pay the price or (2) deliver the finished products of equivalent
value of respondent.

The appellate court, therefore, correctly identified the obligation between the parties as an alternative obligation,
whereby petitioner, Arco Pulp and Paper, after receiving the raw materials from respondent, would either pay him
the price of the raw materials or in the alternative, deliver to him the finished products of equivalent value.

When petitioner Arco Pulp and Paper tendered a check to respondent in partial payment for the scrap papers, they
exercised their options to pay the price. Respondent’s receipt of the check and his subsequent act of depositing it
constituted his notice of petitioner Arco Pulp and Paper’s option to pay.

This choice was also shown by the terms of the memorandum of agreement, which was executed on the same
day. The memorandum declared in clear terms that the delivery of petitioner Arco Pulp and Paper’s finished
products would be to a third person, thereby extinguishing the option to deliver the finished product of equivalent
value to respondent.

DISPOSITIVE: WHEREFORE, the petition is DENIED in part. The decision in CA-G.R. CV No. 95709 is
AFFIRMED.

RONQUILLO VS. COURT OF APPEALS

G.R. No. L-55138

FACTS: Petitioner Ernesto V. Ronquillo was one of four (4) defendants for the collection of
the sum of P117,498.98 plus attorney's fees and costs. The other defendants were Offshore
Catertrade, Inc., Johnny Tan and Pilar Tan. On December 13, 1979, the lower court rendered
its Decision based on the compromise agreement, which stipulates, among others, that the
Plaintiff agrees to reduce its total claim of P117,498.95 to only P110,000.00 and defendants
agree to acknowledge the validity of such claim and further bind themselves to initially pay
out of the total indebtedness of P110,000.00 the amount of P55,000.00 on or before December
24, 1979, the balance of P55,000.00, defendants individually and jointly agree to pay within a
period of six months from January 1980, or before June 30, 1980. Upon the defendant’s
default, herein private respondent (then plaintiff) filed a Motion for Execution. Ronquillo and
another defendant Pilar Tan offered to pay their shares of the 55,000 already due. But on
January 22, 1980, private respondent Antonio So moved for the reconsideration and/or
modification of the aforesaid Order of execution and prayed instead for the "execution of the
decision in its entirety against all defendants, jointly and severally. Petitioner opposed the
said motion arguing that under the decision of the lower court being executed which has
already become final, the liability of the four (4) defendants was not expressly declared to be
solidary, consequently each defendant is obliged to pay only his own pro-rata or 1/4 of the
amount due and payable.

ISSUE: What is the nature of the liability of the defendants (including petitioner), was it
merely joint, or was it several or solidary?
RULING: SOLIDARY. In this regard, Article 1207 and 1208 of the Civil Code provides -
"Art. 1207. The concurrence of two or more debtors in one and the same obligation does not
imply that
each one of the former has a right to demand, or that each one of the latter is bound to
render, entire compliance with the prestation. There is a solidary liability only when the
obligation expressly so states, or when the law or the nature of the obligation requires
solidarity. Art. 1208. If from the law, or the nature or the wording of the obligation to which
the preceding article
refers the contrary does not appear, the credit or debt shall be presumed to be divided into as
many equal shares as there are creditors and debtors, the credits or debts being considered
distinct from one another, subject to the Rules of Court governing the multiplicity of suits."
Clearly then, by the express term of the compromise agreement, the defendants obligated
themselves to pay their obligation "individually and jointly." The term "individually" has the
same meaning as "collectively", "separately", "distinctively", respectively or "severally". An
agreement to be "individually liable" undoubtedly creates a several obligation, and a "several
obligation" is one by which one individual binds himself to perform the whole obligation. The
obligation in the case at bar being described as "individually and jointly", the same is
therefore enforceable against one of the numerous obligors.

PNB vs. Independent Planters Association

Facts: Appeal by PNB from the Order of the defunct Court of First Instance of Manila
dismissing PNB's complaint against several solidary debtors for the collection of a sum of
money on the ground that one of the defendants (Ceferino Valencia) died during the
pendency of the case (i.e., after the plaintiff had presented its evidence) and therefore the
complaint, being a money claim based on contract, should be prosecuted in the testate or
intestate proceeding for the settlement of the estate of the deceased defendant pursuant to
Section 6 of Rule 86 of the Rules of Court which reads: SEC. 6. Solidary obligation of
decedent.— the obligation of the decedent is solidary with another debtor, the claim shall be
filed against the decedent as if he were the only debtor, without prejudice to the right of the
estate to recover contribution from the other debtor. In a joint obligation of the decedent, the
claim shall be confined to the portion belonging to him. The appellant assails the order of
dismissal, invoking its right of recourse against one, some or all of its solidary debtors under
Article 1216 of the Civil Code — ART. 1216. The creditor may proceed against any one of the
solidary debtors or some or all of them simultaneously. The demand made against one of
them shall not be an obstacle to those which may subsequently be directed against the others,
so long as the debt has not been fully collected.
ISSUE: whether in an action for collection of a sum of money based on contract against all
the solidary debtors, the death of one defendant deprives the court of jurisdiction to proceed
with the case against the surviving defendants.
HELD: It is now settled that the quoted Article 1216 grants the creditor the substantive right
to seek satisfaction of his credit from one, some or all of his solidary debtors, as he deems fit
or convenient for the protection of his interests; and if, after instituting a collection suit based
on contract against some or all of them and, during its pendency, one of the defendants dies,
the court retains jurisdiction to continue the proceedings and decide the case in respect of the
surviving defendants. Similarly, in PNB vs. Asuncion, A cursory perusal of Section 6, Rule 86
of the Revised Rules of Court reveals that nothing therein prevents a creditor from
proceeding against the surviving solidary debtors. Said provision merely sets up the
procedure in enforcing collection in case a creditor chooses to pursue his claim against the
estate of the deceased solidary, debtor. It is crystal clear that Article 1216 of the New Civil
Code is the applicable provision in this matter. Said provision gives the creditor the right to
'proceed against anyone of the solidary debtors or some or all of them simultaneously.' The
choice is undoubtedly left to the solidary, creditor to determine against whom he will enforce
collection. In case of the death of one of the solidary debtors, he (the creditor) may, if he so
chooses, proceed against the surviving solidary debtors without necessity of filing a claim in
the estate of the deceased debtors. It is not mandatory for him to have the case dismissed
against the surviving debtors and file its claim in the estate of the deceased solidary debtor . .
.
Section 6, Rule 86 of the Revised Rules of Court cannot be made to prevail over Article 1216
of the New Civil Code, the former being merely procedural, while the latter, substantive.

Ruks Konsult vs. Adworld Sign

GR No. 204866, January 21, 2015
Perlas-Bernabe, J.:

Facts:
Adworld filed for damages against Transworld when Transworld’s billboard structure collapsed and crashed against Adworld’s
billboard structure, which was misaligned and its foundation impaired.
In its Answer with Counterclaim, Transworld averred that the collapse of its billboard structure was due to extraordinarily strong
winds that occurred instantly and unexpectedly, and maintained that the damage caused to Adworld’s billboard structure was hardly
noticeable. Transworld likewise filed a Third-Party Complaint against Ruks, the company which built the collapsed billboard structure
in the former’s favor. It was alleged therein that the structure constructed by Ruks had a weak and poor foundation not suited for
billboards, thus, prone to collapse, and as such, Ruks should ultimately be held liable for the damages caused to Adworld’s billboard
structure.

Issue:
Whether Ruks was solidarily liable with Transworld for the damages in Adworld’s billboard

Held:
Yes.
Jurisprudence defines negligence as the omission to do something which a reasonable man, guided by those
considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something
which a prudent and reasonable man would not do. It is the failure to observe for the protection of the interest
of another person that degree of care, precaution, and vigilance which the circumstances justly demand,
whereby such other person suffers injury.

In this case, the CA correctly affirmed the RTC’s finding that Transworld’s initial construction of its billboard’s
lower structure without the proper foundation, and that of Ruks’s finishing its upper structure and just merely
assuming that Transworld would reinforce the weak foundation are the two (2) successive acts which were the
direct and proximate cause of the damages sustained by Adworld. Worse, both Transworld and Ruks were
fully aware that the foundation for the former’s billboard was weak; yet, neither of them took any positive step
to reinforce the same. They merely relied on each other’s word that repairs would be done to such foundation,
but none was done at all. Clearly, the foregoing circumstances show that both Transworld and Ruks are guilty
of negligence in the construction of the former’s billboard, and perforce, should be held liable for its collapse
and the resulting damage to Adworld’s billboard structure.

As joint tortfeasors, therefore, they are solidarily liable to Adworld. Verily, "[j]oint tortfeasors are those who
command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a
tort, or approve of it after it is done, if done for their benefit. They are also referred to as those who act together
in committing wrong or whose acts, if independent of each other, unite in causing a single injury. Under Article
2194 of the Civil Code, joint tortfeasors are solidarily liable for the resulting damage. In other words, joint
tortfeasors are each liable as principals, to the same extent and in the same manner as if they had performed
the wrongful act themselves." The Court’s pronouncement in People v. Velasco is instructive on this matter, to
wit:
Where several causes producing an injury are concurrent and each is an efficient cause without which the
injury would not have happened, the injury may be attributed to all or any of the causes and recovery may be
had against any or all of the responsible persons although under the circumstances of the case, it may appear
that one of them was more culpable, and that the duty owed by them to the injured person was not same. No
actor's negligence ceases to be a proximate cause merely because it does not exceed the negligence of other
actors. Each wrongdoer is responsible for the entire result and is liable as though his acts were the sole cause
of the injury.

There is no contribution between joint [tortfeasors] whose liability is solidary since both of them are liable for the total
damage. Where the concurrent or successive negligent acts or omissions of two or more persons, although acting independently, are in
combination the direct and proximate cause of a single injury to a third person, it is impossible to determine in what proportion each
contributed to the injury and either of them is responsible for the whole injury.